The paragraph is from the opening of the Thermo Fisher Scientific 2024 Fourth Quarter Conference call. Ezra, the operator, introduces the call, and Rafael Tejada, Vice President of Investor Relations, begins the proceedings. Key participants include Marc Casper, the CEO, and Stephen Williamson, the CFO. The call is being webcast and will be archived on their website until February 13, 2025. The paragraph also includes a disclaimer about forward-looking statements, noting that actual results may differ from expectations and that the company is not obligated to update these statements unless they choose to do so.

In the call, the company discussed using non-GAAP financial measures and provided reconciliations to GAAP measures on their website and in a press release. Marc Casper highlighted strong financial performance in the fourth quarter and full year 2024, with revenue and earnings growth reflecting good operational and commercial execution. The company achieved significant market share gains and reinforced its trusted status with customers. In Q4, revenue grew 5% to $11.4 billion, and adjusted operating income increased 7% to $2.72 billion, with adjusted EPS rising 8% to $6.10 per share. For the entire year, revenue was $42.9 billion, adjusted operating income $9.71 billion, and adjusted EPS $21.86 per share. Market conditions improved as expected, resulting in higher-than-anticipated revenue growth across all end markets.

In the fourth quarter, the company's pharma and biotech sector experienced mid-single-digit growth, marking four consecutive quarters of improvement, despite a full-year decline due to reduced vaccine and therapy revenue. Academic and government sectors grew by high-single digits in the quarter and low-single digits annually, with strong performances in chromatography, mass spectrometry, research, and safety. Industrial and applied sectors saw similar growth trends, driven by electron microscopy and research and safety channels. Diagnostics and healthcare experienced low-single-digit quarterly growth but a slight annual decline due to reduced COVID-19 testing revenue. The company attributes its strong performance to its growth strategy, which focuses on high-impact innovation, trusted customer partnerships, and a robust commercial engine, ensuring continued market share gains and future relevance.

In 2024, the company achieved significant innovation across various sectors, solidifying its industry leadership. Notable product launches included the Thermo Scientific Stellar mass spectrometer and the Orbitrap Astral for advancing clinical research, the Thermo Scientific Dionex Inuvion for efficient environmental testing, and the Thermo Scientific Iliad for advanced materials development in electron microscopy. In biosciences, the Applied Biosystems MagMAX kit improved DNA and RNA isolation from blood cancer samples. Additionally, a bio-based film for single-use technologies was introduced, offering a sustainable alternative in bioproduction. This innovation momentum continued strongly into the fourth quarter.

In the article, the paragraph highlights significant advancements in chromatography, mass spectrometry, and life science solutions, with the launch of the Thermo Scientific iCAP MX Series ICP-MS for trace elemental analysis and enhancements to the Gibco CTS Detachable Dynabeads platform for cell therapies. It also emphasizes the company's efforts in 2024 to strengthen its commercial capabilities, expand pharma services, and introduce the Accelerator Drug Development solution, which leverages CDMO and CRO capabilities to enhance drug development. Partnerships, including one with the National Cancer Institute, and positive customer feedback underscore the company's success and future potential.

The paragraph discusses Thermo Fisher Scientific's achievements and strategies, highlighting the FDA approval of their Ion Torrent Oncomine Dx Target Test for glioma as an example of customer partnership. It mentions a new partnership with the University of Arkansas for Medical Sciences to establish a Proteomics Center of Excellence. The company attributes its success to its PPI Business System, which enhances quality, productivity, and customer loyalty, now further improved by generative AI. Additionally, Thermo Fisher emphasizes its disciplined capital deployment strategy, including strategic mergers and acquisitions, and returning $4.6 billion to shareholders via buybacks and dividends in 2024.

In the past year, the company successfully acquired Olink, now part of its Proteomic Science business, and saw its technology selected for the UK Biobank Pharma Proteomics Project. The firm emphasizes long-term value creation through disciplined M&A, celebrating recent successes with Binding Site's strong performance. In corporate social responsibility, the company advanced its Net Zero goals, expanded STEM education to over 180,000 students, and received recognition for innovation in diagnostics contributing to health equity.

The company reflects positively on its achievements over the past year, highlighting its strong team of over 120,000 employees committed to customer success and scientific advancement. Looking forward to 2025, the company anticipates continued share gains and strong earnings growth, with revenue projected between $43.5 billion and $44 billion, and an adjusted EPS increase of 6% to 8%. The company attributes its success to its growth strategy and strong customer relationships, alongside its PPI Business System. As they enter 2025, the company feels poised to maintain excellent financial performance and enhance its competitive position. CFO Stephen Williamson notes that Q4 results exceeded expectations.

In 2024, the company achieved strong financial performance, surpassing their Q4 targets with nearly 2% higher organic growth and an adjusted EPS increase of $0.14. They ended the year with a robust free cash flow of $7.3 billion. Adjusted EPS grew 8% in Q4 to $6.10, totaling $21.86 for the year, while GAAP EPS was $4.78 in Q4 and $16.53 for the year. Q4 saw a 5% increase in reported revenue with contributions from organic growth and acquisitions. Despite flat full-year organic revenue, pandemic-related revenue was $520 million. Geographically, in Q4, North America and China saw mid-single-digit growth, Europe low single digits, and Asia Pacific high single digits, while full-year results showed North America declined, Europe was flat, and Asia Pacific had low single-digit growth. The company's strategies and execution have positioned them well for 2025.

The company reported strong financial performance this quarter, achieving $2.72 billion in adjusted operating income, a 7% increase from last year, and an operating margin of 23.9%. Full-year adjusted operating income was $9.71 billion with a margin of 22.6%. Gross margin for the quarter was 43.2%, up 170 basis points from last year. R&D expenses for the quarter were $374 million, totaling $1.39 billion for the year, an increase of 4%, highlighting continued investment in innovation. Net interest expense decreased by $183 million year-over-year to $312 million due to effective debt management. The company maintained a 10.5% tax rate for the year and repurchased $4 billion in shares in 2024, reducing average diluted shares by 5 million.

The paragraph provides a financial overview and performance summary of a company, stating that its full-year cash flow from operations reached $8.7 billion, with free cash flow at $7.3 billion after $1.3 billion in net capital expenditures. In 2024, the company deployed $7.7 billion, with $3.1 billion on M&A activities, including acquiring Olink, and $4.6 billion returned to shareholders through buybacks and dividends. The company ended the quarter with $5.6 billion in cash and investments and $31.3 billion in total debt, having a leverage ratio of 2.9 times gross debt to adjusted EBITDA and 2.4 times on a net debt basis. The adjusted ROIC was 11.6%, highlighting strong investment returns. The Life Sciences Solutions segment saw a 5% increase in Q4 revenue, with a 3% growth in organic revenue, despite a 3% decline for the full year and a 4% drop in organic revenue. The segment's Q4 adjusted operating income grew by 6%, with a margin increase to 36.6%. The Analytical Instruments segment saw Q4 revenue grow by 7% and organic revenue increased by 8%, with 3% growth for the full year in both metrics, driven by its electron microscopy and chromatography and mass spectrometry businesses.

In the fourth quarter, the segment's adjusted operating income rose by 13%, and the operating margin improved to 30.5%. Strong productivity, volume pull-through, and favorable foreign exchange rates contributed to these gains, despite challenges from an unfavorable mix and strategic investments. Annually, adjusted operating income grew by 2%, while the operating margin slightly decreased to 26.2%. In Specialty Diagnostics, Q4 saw 5% revenue growth, driven by transplant diagnostics and healthcare channels, with a 3% increase in adjusted operating income, although margins dipped slightly. For the year, revenue grew by 2% with a 3% organic increase, maintaining a solid operating margin. Laboratory Products and Biopharma Services also experienced 4% revenue growth, with pharma services and safety markets performing well, counterbalancing declines in vaccine revenues. However, annual revenue growth was modest at 1%, and organic revenue was unchanged. The operating margin for this segment remained steady in Q4, though annual income declined by 8%, impacted by strategic investments and negative mix effects.

The paragraph provides guidance for the company's financial expectations in 2025. It anticipates revenue between $43.5 billion and $44 billion, with adjusted EPS ranging from $23.10 to $23.50. The company expects 3% to 4% organic revenue growth, factoring in a 1% headwind from pandemic-related revenue runoff and a 1.5% headwind from foreign exchange. Adjusted operating margin is expected to expand by 90 basis points, leading to a 6% to 8% growth in adjusted EPS. The guidance reflects the company's strong market position and growth strategy. It expects market growth to improve slightly in 2025 after being down in 2024, with organic growth projected at 3% to 4%. The company also anticipates a $650 million revenue headwind from foreign exchange. Overall, it forecasts a 1.5% to 2.5% increase in reported revenue and continued strong EPS growth driven by cost management and productivity improvements through its PPI Business System.

The paragraph outlines the company's financial expectations and strategies for 2025, highlighting a projected adjusted operating margin increase of approximately 90 basis points and an adjusted EPS growth of 6% to 8% for the year. The company plans to manage its debt and cash positions efficiently, taking advantage of favorable interest rates. Key assumptions include $350 million in net interest expense, an 11.5% adjusted income tax rate, $1.4 billion to $1.7 billion in net capital expenditures, and free cash flow between $7 billion and $7.4 billion. Capital deployment includes $2 billion in share buybacks completed in January and $600 million in dividends. The full-year average diluted share count is estimated at 378 million to 379 million shares. Q1 is expected to have flat organic growth and adjusted EPS growth due to fewer selling days and revenue phasing. The company aims to maintain strong share gains and adjusted EPS growth in 2025, following a successful 2024.

In the Q&A session of a call, Michael Ryskin from Bank of America asks about the modest policy changes mentioned in the closing remarks, specifically related to guidance methodology for 2025 amid uncertainties like tariffs and export controls. Marc Casper responds by highlighting the strong performance and execution in 2024, noting 4% organic growth and 8% growth in adjusted EPS in the fourth quarter. He emphasizes that market conditions improved sequentially throughout the year and that the company remains a trusted partner with strong momentum for the future.

The company is experiencing positive market growth and predictability in their industry, which aligns with their initial expectations. They anticipate continued strengthening market conditions into 2025, aiming for a 6% to 8% adjusted EPS growth and a 3% to 4% organic return. Despite potential uncertainties and policy changes, the company is confident in their ability to manage these effectively. They foresee a more business-friendly environment in the US, with expectations of a favorable regulatory climate for M&A. The company is optimistic about the importance of their work in science and medicine and is prepared to adapt to any future changes. Michael Ryskin acknowledges Marc's insights.

In the paragraph, Michael Ryskin asks Stephen Williamson about the company's ability to expand operating margins by 90 basis points amid a subdued top-line environment and requests more details on the cost actions taken and future plans. Stephen acknowledges the margin expansion and attributes it to effective cost management, volume recovery, and productivity improvements, particularly as business volumes normalize post-pandemic. He credits not only significant cost reduction initiatives but also effective management of the profit and loss statement and the utilization of the PPI Business System. The Operator then transitions to the next question from Rachel Vatnsdal of JPMorgan, who wants to explore Stephen's earlier response regarding policy changes, particularly focusing on NIH funding.

The paragraph discusses the uncertainty surrounding federal funding due to the new administration and its potential impact on customers, particularly in the academic and government markets. Marc Casper emphasizes that it's too early to predict any policy changes, but the company maintains a collaborative relationship with the administration to support their clients. He anticipates that academic and government market growth will align with the company's average, with stronger performance expected in the pharmaceutical and biotech sectors. The fourth quarter saw strong global performance in academic and government markets, providing a hopeful outlook despite the current uncertainties.

In the fourth quarter, the Analytical Instrumentation business experienced 8% organic growth, contributing to a 3% growth for the full year, despite a relatively muted performance in China, which typically plays a significant role in the industry. The success was driven by steady innovation with new products in areas like electron microscopy, chromatography, and mass spectrometry, which led to meaningful market share gains. Although China's stimulus contributed some revenue in the fourth quarter, it wasn't substantial. Looking forward to 2025, assumptions about China's stimulus contribution remain cautious.

In this conference call exchange, Stephen Williamson and Marc Casper discuss the company's strong order performance in China, which will impact shipments in 2025. They address Jack Meehan's question regarding the phasing of services revenue, particularly for PPD clinical research. Stephen explains that Q1 sees significant timing effects due to pandemic-related runoff compared to the previous year. Marc highlights their leading position and reputation in clinical research and pharma services, emphasizing innovation and quality. He also notes the integration with their pharma services business, which offers contract development and manufacturing capabilities.

The paragraph discusses the progress and future outlook of Accelerator Drug Development in the pharmaceutical and biotech industry. Over three years, the company has evaluated the benefits of combining capabilities to enhance customer returns on R&D investments, achieving low single-digit organic growth despite challenges from declining vaccine and therapy demands. The industry trend line suggests high single-digit growth, influenced by biotech conditions and pharmaceutical companies reprioritizing for the IRA. Strong authorizations and a promising commercial pipeline for 2024 suggest underlying business momentum. The company's guidance indicates stable conditions similar to the previous year, setting up for potential success in the future. Overall, the outlook is positive.

In the paragraph, Stephen Williamson discusses the company's confidence in returning to the long-term market growth rate of 4% to 6% and exceeding it with strong organic growth. He mentions that market conditions are improving, and the company expects continued improvement throughout the year. The exact market growth rate at the year's end is uncertain, but the focus is on achieving robust adjusted EPS growth. Jack Meehan expresses appreciation for the insights, and Doug Schenkel from Wolfe Research is introduced to ask questions about the company's guidance.

The paragraph features a discussion about expected financial performance, specifically focusing on organic growth and operating margin expansion leading up to 2025. The speaker inquires whether the company anticipates returning to a 7% to 9% organic growth rate by the end of 2025 and comments on the notable goal of achieving a 90 basis points increase in operating margins despite lower revenue growth. The questions raised include what factors will enable this achievement, whether it's due to product mix or efficient operations, and if such margin improvements can be sustained beyond 2025. Marc Casper appreciates the question and indicates that investor and analyst focus has been on the fluctuating growth rate of the industry, recognizing its strong potential and current recovery phase.

The management team is focused on delivering strong performance and execution to create shareholder value. They anticipate a better market environment and organic growth this year, but the emphasis is on controlling earnings per share through their PPI Business System, execution, and cost discipline. While long-term growth is projected at 7% to 9%, this year's growth is expected to be 3% to 4% due to the runoff of pandemic-related revenue. Despite some headwinds, they aim for strong mid-single-digit growth by year-end, progressing towards their long-term goals.

The paragraph discusses the reasons for and timing of launching an accelerator program, which aligns with improved market conditions and success in integrating PPD. Marc Casper highlights the importance of making reliable promises to customers and emphasizes waiting until there is strong evidence of success before promoting new initiatives. The focus is on the synergy between capabilities and customer confidence, ensuring the delivery of great results through combined company strengths. There has been significant progress in customer satisfaction and authorization, allowing customers to tailor their engagement.

The paragraph discusses a company's strategy of offering targeted insights and expertise to help clients, particularly in biotech and large pharma, streamline their processes and reduce costs. It highlights excitement and interest in their services, noting faster decision-making in biotech compared to large pharma. Although it takes time to turn authorizations and orders into revenue due to long-cycle business nature, there's optimism for growth acceleration in 2026 and beyond. The conversation then shifts to the company's performance in China, where despite a challenging economic environment and market, they experienced growth and gained market share in the previous year. They anticipate a similar environment in 2024, with potential benefits from stimulus efforts.

The paragraph covers a discussion in a conference call where the speaker, Marc, addresses questions from Puneet Souda of Leerink Partners. Marc talks about their outlook on economic conditions, noting that no strong recovery is expected beyond existing stimulus efforts. He mentions how value-based procurement and reimbursement in the healthcare sector have a minor impact on their diagnostics business in China. Puneet asks about the differences in engagement with large-cap biopharma companies compared to emerging biotechs, and the increasing number of IND filings in the U.S. from Chinese molecules. Marc reflects on spending considerable time with customers in January, both on the West Coast and in Europe, gaining insights through these interactions.

The paragraph discusses the positive outlook and increased confidence among larger biopharma companies as they enter the year, having taken actions that have strengthened their positions. There is significant optimism surrounding the impact of GLP-1s and the potential for quickly adopted, relevant medicines to improve human health. Emerging customers also show improved confidence in funding and partnerships. Innovation is highlighted, particularly with a rise in licensing deals, especially for China-based companies aiming to serve the global market. The paragraph concludes with Marc Casper expressing gratitude to participants and optimism for Thermo Fisher Scientific's future performance, emphasizing the company's strong momentum and readiness for success by 2025.

This summary was generated with AI and may contain some inaccuracies.